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Sally Beauty Announces Q2 2018 Financials

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Sally Beauty Holdings, Inc. (Sally Beauty) has announced its financial results for Q2 2018.

Net sales saw an increase of .9%, reaching $975.3 million compared to the prior year.

President and CEO Chris Brickman said, “Although we delivered sequential improvement in same-store sales and sustained growth in our Sally e-commerce business, traffic trends in our Sally Beauty stores in the U.S. continued to be a challenge. A slight increase in consolidated net sales was offset by a modest decline in gross margin and higher selling, general and administrative expenses due primarily to unfavorable foreign exchange translation and operating expenses from our recent Canadian acquisition. However, the benefits of U.S. tax reform, lower interest expense and a lower share count helped drive strong double-digit growth in both reported and adjusted diluted earnings per share. In addition, our operations continue to generate substantial operating free cash flow, with an increase of 22.3% over the prior year, to $59.1 million.”

“We continue to make progress on strategic initiatives focused on driving long-term growth and intensifying our focus on our defensible core categories - hair color and hair care. During the quarter, we completed the distribution center investments that allow Sally e-commerce orders to be shipped in two days or less to almost all U.S. households and we began marketing that capability late in the quarter. To further strengthen our hair color offerings in Sally stores, we successfully completed the nationwide launch of two new color lines - Wella ColorCharm Paints and Arctic Fox. Additionally, we completed the testing and refinement of the new Sally loyalty program and we are preparing to launch the new program nationally before the end of the fiscal year. We also finalized the majority of the initiatives outlined in the international portion of our 2018 Restructuring Plan, with the goals of reducing our European cost base and better leveraging our global scale. And, lastly, we repriced our $548.6 million floating rate term loan, reducing the interest rate spread by 0.25%, thus lowering our future cash interest expense.”

Related: Sally Beauty Approves Cost Reduction Plan